Farm inheritance tax protestors told no more changes to proposals

There will be no more changes to already watered-down plans to increase agricultural inheritance taxes, the government has said.

Protesters attempted to disrupt a speech by Environment Secretary Emma Reynolds at the Oxford Agricultural Conference on Thursday by demonstrating honking tractors.

Last month the Government announced that the planned threshold for a 20% tax on inherited agricultural assets would be raised from £1m to £2.5m.

Asked about other changes, Reynolds told the conference: “That’s it, I’m afraid… it’s the people in this room who have engaged with us constructively and relatively quietly who have had an influence on this process, not the people who are honking their horns.”

The increase in the tax threshold was seen by critics as a cut after months of protest against the initial plans announced in Chancellor Rachel Reeves’ first budget in 2024.

But Reynolds told the conference the government had listened to farmers, who “are not shy about coming forward and giving you their views” and had now “significantly increased” the tax threshold which will come into force in April.

Initial government proposals would have seen inherited agricultural assets worth more than £1m taxed at 20%, half the standard rate of inheritance tax, raising around £520m a year by 2029.

The government had argued the change would protect small farms while preventing wealthy investors from buying farmland to take advantage of a tax loophole.

However, in December he withdrew from the initial proposal increasing the threshold to £2.5 million.

Coupled with an exemption that allows farmers to pass their assets to their spouses tax-free, the new policy means a couple could pass on up to £5m of qualifying assets, without paying tax.

However, the Country Land and Business Association (CLA), which represents rural land and business owners in England and Wales, said it would continue its campaign to “completely reverse this policy”.

CLA president Gavin Lane said the government’s “partial step back” in December was a “welcome relief” but “further recognition that their reforms were poorly thought out and deeply damaging”.

Lane said the policy as it remains is still “terrible for the rural economy.”

The National Farmers’ Union (NFU) said it remained opposed to the tax in principle and would “press for further changes at the next political opportunity”.

But chairman Tom Bradshaw admitted: “The news of the change in the inheritance tax threshold just two days before Christmas, and a few days after my meeting with the Prime Minister, came as a huge relief to many farming families across the country.”

“This change removes the tax burden from a significant number of family farms,” he added.

The Environment Secretary also promised there would be “no more sudden and unexpected closures” of farm payment systems, as she outlined reforms to England’s flagship environmental program, the Sustainable Farming Incentive (SFI).

Last March, the SFI, which funds English farmers for “public goods” such as insecticide-free farming, wildflower strips and hedge management, was suddenly closed because funding had been fully allocated for the year.

At the time, the NFU described the closure as “another blow to English farms”.

Since then, there has been uncertainty over the scheme, a key part of the Environmental Land Management Schemes (ELMS) which replaced agricultural subsidies after Brexit.

A government-commissioned review of agricultural profitability by former NFU president Baroness Minette Batters warned late last year that the sector was “bewildered and frightened”, with changes to inheritance tax and SFI payments causing significant and ongoing concerns.

On Thursday, Reynolds outlined her plans for what she described as a “simpler, fairer and more stable” system, admitting that “mistakes have been made” regarding payments in the past.

She said the first application window for the new program would be in June and would be for small farms of less than 50 hectares (120 acres) and those not already on a payment scheme. A second, wider application window would open from September for all farms.

She supported the overall approach of using agricultural payments to finance environmental benefits, telling farmers at the conference: “Protecting the environmental foundations of agriculture is not separate from profitability, it is essential to it.”

The government was considering changes including reducing the number of nature-friendly farming initiatives funded, limiting the amount of land that could be put into action and considering capping the amount of money a farming business could receive for SFI, she said.

The Wildlife Trusts said it was now “vital” that the farm payment budget for environmental programs “be significantly increased” to effectively tackle climate change and wildlife decline.